About the Rental Property Calculator
A rental property calculator tests whether a property works as an investment rather than as a home. It compares the rent coming in against the mortgage and running costs going out, and reports the monthly cash flow along with the yield on the cash you actually put in.
The formula
Cash flow = rent − (mortgage payment + operating expenses)Operating expenses cover taxes, insurance, maintenance, management, and an allowance for vacancy. Cash-on-cash return is annual cash flow divided by the cash invested — deposit plus closing costs.
How to use this calculator
- 1Enter your Property Price ($). The field starts at
300000, which you can overwrite. - 2Enter your Down Payment (%). The field starts at
20, which you can overwrite. - 3Enter your Mortgage Rate (%). The field starts at
6.5, which you can overwrite. - 4Enter your Monthly Rent ($). The field starts at
2200, which you can overwrite. - 5Enter your Monthly Expenses ($). The field starts at
400, which you can overwrite. - 6Read the result straight away — it recalculates as you type, so there is no button to press. Use Share to copy a link that reopens the page with your exact numbers filled in.
Worked example
| Input | Value |
|---|---|
| Property Price ($) | 300000 |
| Down Payment (%) | 20 |
| Mortgage Rate (%) | 6.5 |
| Monthly Rent ($) | 2200 |
| Monthly Expenses ($) | 400 |
Result
Monthly Cash Flow: $283.04
Cap Rate: 7.20%
Cash-on-Cash Return: 5.66%
Those are the values the page loads with, so you can reproduce this result yourself and then change one field at a time to see what drives the outcome.
Understanding your result
Positive cash flow means the property pays for itself and hands you the surplus. Negative cash flow means you are subsidising it monthly and betting on appreciation to make up the difference, which is a materially riskier position than the spreadsheet suggests.
The most common way to overstate a deal is to omit the irregular costs. Vacancy, turnover, and capital expenditure — roofs, boilers, appliances — do not appear in a normal month but are certain over a holding period. Experienced investors reserve 5 to 10 percent of rent for vacancy and another 5 to 10 percent for capital items before calling a deal profitable.
Things worth knowing
- The 1 percent rule is a screening shortcut, not an analysis: monthly rent of at least 1 percent of purchase price. Few properties in high-cost markets clear it.
- Budget management at 8 to 10 percent of rent even if you self-manage. It prices your own time and keeps the deal viable if you stop.
- Investment mortgages usually price 0.5 to 0.75 points above owner-occupier loans and require a larger deposit.
- Depreciation is a genuine tax benefit on rental property, but it is recaptured on sale. Ask an accountant how it affects your position.
- Cash-on-cash return lets you compare a property against other uses of the same money. Cash flow alone does not.
Frequently asked questions
What counts as good cash flow on a rental?+
Many investors target at least 100 to 200 dollars per unit per month after all expenses including reserves. The threshold varies by market: lower cash flow can be acceptable where appreciation is strong, but it leaves less margin for error.
What is the difference between cap rate and cash-on-cash return?+
Cap rate is net operating income divided by purchase price and ignores financing, so it compares properties. Cash-on-cash return divides annual cash flow by the cash you invested and reflects your actual leverage and outcome.
How much should I set aside for repairs?+
Plan on 1 to 2 percent of property value annually for maintenance, plus a separate capital expenditure reserve. Older properties need more, and a single roof or HVAC replacement can erase a year of cash flow.
Is negative cash flow ever acceptable?+
It can be, if you are confident about appreciation and can comfortably fund the shortfall for years. But it converts an income investment into a speculative one, and a vacancy or a job loss becomes much harder to absorb.